Advantages of the Collaborative Economy
With the rapid evolution in the lifestyle of the customers and with having technology advancements, several business organizations are initiating initiative and distinctive way of creating value to their customers (Forbes.com 2017). Majority of them are not directly competing with the traditional players in the particular industry, rather than they have implemented innovations in their business activities to enhance the value being offered by the existing competitors (Bucherer, Eisert and Gassmann 2012). They key competitive advantage that is being possessed by them over the traditional players is their way of delivering the products or services to their customers. These organizations have promoted the theory of sharing or collaborative economy in the current business scenario.
The key business model being followed by the organizations in the collaborative economy is delivering the existing products or services in the customers in an innovative way, which will prove more convenient to the customers (Kostakis and Bauwens 2014). This model helps these organizations in creating competitive advantages over their traditional rivals. However, with the initiation of the collaborative or sharing economy, various disadvantages are being emerging for the economy, government as well as for other stakeholders.
This report will discuss about the opportunities and threat that may get emerged from the initiation of the shared economy. In addition, the key differences between the traditional business model and the shared economy model will be discussed. Zoom2u is an organization operating in this shared economy (Zoom2u 2017). Their business model will be evaluated in determining the effectiveness of their competitors.
For Workers
It acts as motivating factor for the workers and employees. This is due to the fact that, in the case of the shared economy, employees have the options of working at their own convenience without being controlled by specific corporate rules and regulations (Tricker and Tricker 2015). Thus, the productivity of the employees get increased in the shared economy. Another advantage for the employees in shared economy is the broad earning opportunities. In the case of shared economy, employees will not be bound by any limit of their income, rather than, they will earn money as per their given effort and time. Employees have the flexibility of working from their convenience in the case of the shared economy (European Economic and Social Committee 2017).
Enhancement of the performance of the employees will have favorable implications on the business organizations. The organizational productivity will get increased. The talent pool for the organizations to select their employees will also get increased due to the fact that, more employees will be available for these organizations due to their increased convenience (Srivastava and Kaul 2014). Shared economy mostly operates based on renting rather than purchasing. Thus, organizations will have the continuous flow of customer demand in the market. Due to the fact that, organizations in the shared economy does not have to follow the corporate rules and regulations, thus, their cost of operations is also low compared to the traditional organizations.
For Businesses
Shared economy runs on the theory of reuse and recycles. Unused and spare items are being commercially used under this concept. Thus, for the government, it is beneficial due to the fact that the available resources are being effectively utilized. The rate of unemployment will be reduced (Williams 2012). Organizations in the shared economy will have broader reach than the traditional business organizations. This is due to the reason that, traditional organizations select their employees on the basis of certain criterions that are not applicable for all, whereas in the case of the shared economy, the individual skills possessed by the candidates are being leveraged by the organizations. Shared economy also helps in sustainable development of the society, which is beneficial for the government (Griggs et al. 2013).
For Workers
In the shared economy, employees are being deprived from the basic amenities from their workplace. In the case of traditional organizations, employees have the benefits of various monetary and nonmonetary perquisites, which are not available to the employees in the shared economy (Kwon and Hein 213). Thus, employees facilities in the shared economy is less compared to the traditional organizations. Another key disadvantage for this concept is the probability of fraud. This is due to the fact that, shared economy organizations runs on the basis of shared community (Francis et al. 2012). Thus, they do not have the affiliation and recognition, which is required by the traditional organizations. Moreover, the core motives of shared community get diluted due to the presence of large capitalist organizations.
For Businesses
Traditional business organizations will be adversely affected due to the emergence of the shared or collaborative economy (Pourmohamadi and Dong 2013). The traditional business structure will get disrupted due to this. In the case of the shared economy, organizations have less control on the business operations due to the reason that the employees in these organizations mostly works as freelancer. Thus, probability of occurrence of unwarranted incidents will be more for these organizations.
For Government
Due to the fact that, organizations operating in the shared community does not need to adhere with corporate rules and regulations, thus, government get deprived of having corporate tax from them (Badertscher, Katz and Rego 2013). Thus, the tax structure will get affected adversely. Moreover, the employment being generated by these organizations in on temporary basis and thus, it cannot be treated as the yardstick of reducing the rate of unemployment. Thus, eventually the actual unemployment will not get reduced.
For Government
Various literatures are being done to determine the effectiveness of the collaborative economy. Researchers have been given both for and against the potentiality of the concept of shared economy. According to Heinrichs (2013), shared economy is the new mean of sustainability. Under this concept, communities and societies are being involved in the business activities. Thus, holistic up liftment of the society can be achieved. According to Huckle et al. (2016), advancement of the internet and technologies is further enhancing the potentiality of the collaborative or shared economy. They also stated that, the majority of the organizations operating on the basis of shared economy are being driven by internet and technologies. This is due to the fact that, the majority of the organizations driven by this concept are providing customer convenience by the means of internet.
Several researchers such as Hamari, Sjoklint and Ukkonen (2016), have thrown the light on the motivation of the people in getting involved in the concept of the shared economy. According to them, the freedom and flexibility that are being offered by these organizations is the main motivating factor for the people. People those who are joining in these organizations are enjoying the flexibility of working. It is up to them that too what extent they want to associate with the particular job. However, several other authors have given the opinions that there are various negative effects of initiation of the concept of collaborative economy. According to Sundararajan (2014), the key negative implication of this concept is their immunity in adhering to the rules and regulations for the corporate. According to the author, organizations driven by this concept are being treated as the community driven platform rather than a full-fledged corporate organization. Thus, according to him, this may pose challenge for all the stakeholders in future. This is due to the fact that, any type of mishaps or fraud that may get generated in their course of business, which cannot be prevented.
According to Owyang, Tran and Silva (2013), the negative impact of the concept of shared economy will also adversely affect the government also. This is due to the fact that, one of the key earnings of the government is from the corporate tax. Thus, due to the reason that organizations in the shared economy are not adhering with the legislations, thus, government will not receive any tax from them. Thus, according to the author, at the end of the day, the whole economy will be adversely affected. Therefore, from the above critical analysis, it is been seen that, initiation of the shared economy is having both advantages as well as disadvantages for the whole economy as well as for all the stakeholders.
Disadvantages of the Collaborative Economy
The current scenario of the courier industry is showing positive trend with generating annual turnover of $171.6 billion. It is growing at the rate of 2.4 percent and being forecasted that it would grow by 2.2 percent by 2022. Majority of the market share are being hold by FedEx, DHL and Australia Post. However, the traditional business model drives all of these organizations (Wang, Jie and Abareshi 2014). According to the traditional business model, the core business activities of the organizations include initiation of effective organizational structure and procedures and effective promotion of their products in the market, which will result in inflow, and outflow of cash (Casadesus-Masanell and Zhu 2013).
Figure: 1 Traditional Business Model
In the case of Australian courier industry, the key activities of the players in this market involve having employees, warehouses and other resources in order to drive their business activities effectively. Distribution hub is being maintained by them in order to effectively carry out their distribution activities (Rushton, Croucher and Baker 2014). They are also maintaining transportation for quick and secured transportation of the couriers. Sales and marketing is being done on an extensive manner in order to attract more number of customers. The main criteria of enhancing the value creation of the customers in the traditional business model are quick delivery of the products with less chance of damage. FedEx is the leading business organization currently operating in the Australian industry. The main competitive advantages that they possess are the timely delivery of the logistics material to their customers (Wagner III and Hollenbeck 214). Technological advancement and innovations help this industry to enhance the value creation of the customers. Technologies are being involved in letting the customers track the status of their orders by own. Moreover, online availability enable this industry to help the customers in choose their pick and drop location more effectively.
SWOT analysis will be used to determine the external and internal threats and opportunities of the courier industry in Australia. The key strengths of this industry are the market penetration among the customers. Courier service is having no close substitutes in the market. Moreover, with the reduction in the service cost, more and more customers are being attracted. The key weaknesses include the dependence on the third party transportation medium for the distribution of the orders. This caused delay in the service delivery due to the inconvenience caused in the mode of transportation.
Critical Analysis of the Collaborative Economy
Opportunities include the rapid advancement of the technologies in this filed. The more effective will be the technologies, the more will be the effectiveness of the service delivery. Moreover, with the emergence of the e-commerce sectors, opportunities are more for this industry. This is due to the reason that, the goods in the e-commerce sectors are being delivered by the courier organizations. Threats are also present in this industry and the key threat is from the internal environment. Emergence of the shared economy concept in this sector is also posing threat to the traditional players operating in this sector. Organizations driven by the sharing economy are offering the similar services at more cost effective manner. Thus, the market potentiality of the traditional business organizations is decreasing.
As discussed earlier, more and more organizations driven by the concept of collaborative economy are entering in the courier industry in Australia. One of the prominent entrants is Zoom2u. They are offering courier services to their customers similar as the traditional players. However, their competitive advantages are the cost effectiveness that they offered to their customers. According to the concept being followed by them, the employees are not being selected for permanent basis, rather than they join the organization as freelancer and as their interest. Majority of their employees are fond of traveling and along with that, they are earning money through delivering the orders of Zoom2u. Thus, the transportation cost is being reduced for this organization (Redding and Turner 2014). This helped them in providing cost effective services to their customers.
Thus, according to the model of shared economy, the core business activities of Zoom2u are being operating on the basis of sharing of activities by their employees. In addition, the competitive advantages that they are possessing over their conventional competitors are the cost effectiveness and the initiation of latest technologies. Initiation of the newer technologies is helping them in providing more convenience to their customers. Zoom2u enables the customer to track the real time movement of their orders along with selecting the chosen delivery person by own. This feature enables them in enhancing the value creation of the customers.
Moreover, the reach of the collaborative economy is more rapidly increasing than that of the traditional business model in this industry. This is due to the reason that, the more involvement of the people in the shared economy model is helping to generate positive word of mouth. SWOT analysis will be initiated in order to determine the future opportunities and threats for Zoom2u. Strengths of Zoom2u include the initiation of the latest technologies in their business activities. More implementation of the technologies will help to enhance the convenience of the customers. In addition, due to the fact that they are driven by the concept of shared economy, the cost of operation for them is less. Employee cost and other cost of resources are less for them due to the fact that, employees are working in this organization as freelancers.
The weaknesses of them include, less experience in the market. Being a new entrant in this industry, Zoom2u do not have the required brand equity or identity compared to other traditional players. This may have adverse impact in attracting new customers. Moreover, reliability of the freelancing employees is not proven and it may hamper their service effectiveness. Opportunities of this organization include advancement of the technologies. This is due to the reason that, with the advancement of the technologies, more and business opportunities will be generated for them. Zoom2u may also have certain threats for them, which include initiation of the shared economy model by the established player in the market. Another threat includes fraud committed by the freelancing employees, as they do not have direct control over their employees. This may have adverse affect on their business potential.
Conclusion
Having analyzed the various aspects of the shared economy model over the traditional business model, it can be concluded that shared economy is having both merits and demerits. Shared economy model is a new age concept that is being extensively implemented by various organizations which attracts and involves more number of customers. However, there are few disadvantages being identified, which will pose major challenges for the organizations in the future. SWOT analysis of the shared economy helps to determine the opportunities and threat that are being faced by Zoom2u. Thus, it is being recommended that, effective implementation of the policies and strategies will help to overcome the challenges and enhance the business potential.
References
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